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China’s economy shakes off slump

BEIJING — China’s factory output grew in July at its fastest pace since the start of the year, adding to a run of data suggesting the world’s second-largest economy may be stabilising after more than two years of slumping growth.

Reuters

A steadying economy would be a relief to China’s leaders, who worry a further slowdown, could derail their efforts to rebalance the economy away from its credit and investment-driven growth model to one in favour of consumption.

Factory output rose 9,7% in July from a year earlier, the fastest growth since output grew 9,9% over January and February, National Bureau of Statistics data showed.

It followed Thursday’s surprisingly strong trade data and, given targeted measures since mid-year to support small firms and exporters, added to signals the economy may have found its base after slowing in nine of the past 10 quarters.

“While we would not say that China is out of the woods yet, the recent rise in sentiment has been noticeable, and talks that economic growth will fall below 7% in 2013 now seems rather far-fetched,” said Chester Liaw, an economist at Forecast Pte in Singapore.

The government has made clear it will accept some slowdown as it pushes through its reforms, but has also expressed confidence of meeting its 7,5% growth target this year — which would be China’s slowest growth in 23 years.